ITC notches up management contracts for seven hotels

Being asset light remains the name of the game in the hospitality sector globally. And cigarette-to-soap maker ITC is taking this mantra seriously enough as it aggressively pursues management contracts as a strategy to add new hotels to its hospitality vertical. So much so that the group has signed seven management contracts in the last 100-odd days for hotels in India and beyond.

While the newly-signed hotels in Dwarka and Chandigarh have 393 rooms and 49 rooms, respectively, Kozhikode, Kollam and Dubai with five properties will make available close to 500 rooms taken together. In all, these have added some 1,000 guestrooms to ITC’s existing inventory of 8,500 across the country.

Staying with its focus on building its hotel network through management contracts, ITC Hotels looks to add three more properties to its portfolio in the next 6-8 months. “The new projects include a super-premium luxury hotel in Mahabalipuram (106 rooms) under the ITC brand and one hotel each in Jodhpur (116) and Patna (170) under the WelcomHotel brand. This apart, the hotel chain will add over 30 hotels to its portfolio under the Fortune brand,” ITC Hotels said in a statement. Hotels under the Fortune brand will be added over 16-24 months.

While management contracts may guide the overall direction, the hotel chain isn’t shying away from investing in a select few. For instance, an all-suites luxury golf resort ITC Green Bharat featuring 104 keys at Manesar is currently at a very advanced stage of development and, according to the ITC website, is scheduled to open in December. Similarly, a 490-room ITC Hotel in Kolkata will start receiving guests by mid-2014. Both projects are likely to attract Rs1,000 crore or more in equity from the hotel chain.

In fact, around the same time last year, ITC acquired a 5-acre land parcel on a 99-year lease in Colombo for its maiden overseas hospitality foray. The Lankan government has approved the hospitality major’s plan to invest up to $300 million (Rs1,856 crore) in the luxury hotel. Incidentally, the site was earlier allotted to a Chinese company for a similar project, which later backed out.

Five of the seven projects announced under management contracts in the last three months or so were unveiled in September. These were added through a tie-up between ITC Hotels and Middle East-based businessman Ravi Pillai’s RP Group Hotels & Resorts. The association was to manage RP Group’s five hotels of which the five-star properties would sport ITC’s WelcomHotel brand while the mid-market and upscale properties would be managed under the ‘Fortune’ brand.

A leading engineering, procurement and construction conglomerates, with presence in key markets of the Middle-East, Australia and Africa, the RP Group shot to fame after acquiring Hotel Leelaventure’s five-star beach resort at Kovalam for a whopping Rs500 core the property continues to be managed by the Leela Group though.

The group was also touted to be in discussions to acquire Leela Palace Chennai hotel in a similar arrangement like Kovalam, but talks fell through on valuation issues.